Another speaker from another central bank delivered a message that the markets paid little attention to, but should long remember: Andy Haldane, executive director for financial stability at the Bank of England. Intense, thin as a whippet and sharp as a razor, Haldane is one of the world’s smartest financial regulators.

In his speech, “The Dog and the Frisbee,” Haldane warned that the growing complexity of markets and banks can’t be controlled with increasingly complex regulations. Tapping deep into behavioral economics, Haldane argued that regulators need to bear in mind five fundamental limitations of the human mind:

1) since even computers can’t track all the necessary variables in the massively interlinked financial world, there is little hope that humans can;

2) intense information feedback from markets makes signals almost impossible to detect in the noise, so that “the more complex the environment, the greater the perils of complex control”;

3) even when the variables that decisively affect outcomes are known, it’s hard to know which ones will matter the most in a given situation, and it is hard for regulators to resist the temptation to pay more attention to the most vivid factors;

4) regardless of the massive amounts of data available, the sample of financial crises remains relatively small, making it hard to form reliable conclusions about what works best to prevent or cure them;

and 5) complex and detailed rules lead regulators and financial institutions alike to “manage to the rules,” tiptoeing right up to the hot red line at which a crisis can be triggered.

Tracking regulatory complexity over time, Haldane points out that the Basel rules on capital requirements for international banking went from 30 pages in 1996 to 347 pages in 2004 to 616 pages in 2010. Banks complying with the rules a generation ago had to calculate a handful of ratios; now they must calculate several million. What once were based on hard numbers now, often, must rely on thousands of guesstimates and dizzyingly complex mathematical models contingent on questionable assumptions.

Meanwhile, Haldane pointed out, risk models have grown so complex that to have statistical confidence that a given set of formulas have captured true risks, you need 400 to 1,000 years of data. Not even the Monte dei Paschi of Siena, Italy, which was founded in 1472, has a meaningful data-set that goes back nearly far enough.

In short, warned Haldane, “for investors today, banks are the blackest of boxes” and the existing regulatory structure “provide[s] a subsidy to complexity.” Big banks make more jobs for regulators; more regulations make big banks get even bigger.

Just look at this table produced today by SNL Financial:

The four biggest U.S. banks haven’t changed in the past 10 years. But a decade ago they accounted for 47% of the market share of the 50 biggest banks by assets. Today they are at 62%. Too big to fail? Try “few big to fail.” The giants have gotten so giant that if a single one of them fails, the entire global financial system could be at risk.

Unless regulators (and legislators) heed Haldane’s call for a radical return toward simplicity, the potential for more financial crises will only grow more acute.